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The Mortgage Graveyard
Failed, closed and a c q u i r e d mortgage-related entities.

3 Bank Failures in 1 Day

Recent financial institution closings

April 21, 2013

By Mortgage Daily staff

Friday was a brutal day for federally insured banks, with three financial institutions failing. Losses at one of the banks are expected to be three times worst than at either of the other two.

First Federal Bank was closed down Friday by the Office of the Comptroller of the Currency. The bank was located in Lexington, Ky.

First Federal Bank was founded in 1993 and employed just 28 people at the time of its demise.

"The OCC acted after finding that the bank had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices," a statement from the regulator said. "The OCC also found that the bank incurred losses that depleted its capital, and there is no reasonable prospect that the bank will become adequately capitalized."

An OCC cease-and-desist order was issued against First Federal on Oct. 18, 2012, while the Office of Thrift Supervision entered a supervisory agreement with the bank in April 2010.

First Federal reported $94 million in deposits as of the end of last year. Its $100 million in total assets included $45 million in residential loans, $16 million in commercial real estate loans and less than $1 million in construction-and-development loans.

Like all federally insured banks that fail, the Federal Deposit Insurance Corp. was named receiver of the five-branch bank.

Your Community Bank was awarded the winning bid for First Federal. The FDIC estimates that its Deposit Insurance Fund will be depleted by $10 million as a result of the failure.

The next bank to go was Heritage Bank of North Florida, which was shuttered by the Florida Office of Financial Regulation.

The 26-year-old bank had a staff of 25 employees when it failed. Deposits stood at $109 million. It was hit with an FDIC cease-and-desist order in August 2009 and entered a written agreement with the Federal Reserve Bank of Atlanta the following December.

The FDIC awarded the winning bid for the Orange Park, Fla., bank to FirstAtlantic Bank, which took over its $111 million in total assets including $10 million in home loans, $66 million in CRE loans and $6 million in C&D loans.

After all is said and done, the FDIC projects that the cost of the failure will exceed $30 million.

final bank failure, also in Florida, was seven-year-old Chipola Community Bank, which was seized by the Florida Office of Financial Regulation.

The Marianna, Fla., bank had only $38 million in deposits and $39 million in assets including $6 million in residential mortgages, $8 million in CRE assets and $2 million in C&D holdings.

Chipola, which had 10 employees, was taken over by First Federal Bank of Florida at an expected cost of $10 to the FDIC's Deposit Insurance Fund.

Chipola was the eighth FDIC-insured bank to fail this year.

On April 12, the National Credit Union Administration reported that it liquidated Shiloh of Alexandria Federal Credit Union. The $2.4 million credit union, which was chartered in 1993, had just 624 members who were members and employees of Shiloh Baptist Church in Alexandria, Va.

"NCUA made the decision to liquidate Shiloh of Alexandria Federal Credit Union and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations," the NCUA stated.

Shiloh was the sixth credit union failure tracked by Mortgage Daily so far in 2013.

In all, 20 mortgage-related casualties have been reported by Mortgage Daily this year.

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